On 28 January, the UK High Court ruled that London Luton Airport Operations Limited (the “Airport”) was in a dominant position with regard to its award of a coach concession between the airport and London and it had abused that dominance when it awarded a contract to National Express. The case serves a timely reminder of what contractual terms or policies a court will consider abusive when a company is in a dominant position.
The case concerned a bus route between the airport and London Victoria. This route was previously exclusively run for 30 years by an operator named Arriva the Shires Ltd (“Arriva”). The route was the most profitable route that Arriva operated.
In 2013, the Airport decided to hold a tender process for the concession rather then renewing their contract with Arriva. Arriva amongst others bid for the concession. Arriva were unsuccessful and the bid was awarded to National Express subject to an exception that Easybus, another operator, could run a small capacity service on the same route.
Following the awarding of the concession, Arriva started an action in the High Court alleging that the Airport was in a position of dominance in awarding the coach concession and had abused that dominance in the way it had awarded and agreed the terms of the new concession.
Arriva alleged that the Airport was inclined not to renew their contract with Arriva. Arriva had fallen out of favour with the airport and for this reason, the Airport never intended to fairly consider them for the new concession. It also alleged that once the concession had been awarded, its terms were prejudicial to Arriva and other operators who had not been granted the concession.
The particular terms which were alleged to be anti-competitive were the length of the exclusive concession of 7 years to National Express, the exception granted to Easybus but not others and the granting to National Express of the right of first refusal over other services between London and Luton Airport.
Although the court held that Arriva’s participation in the tender process for the concession was not compromised and was genuine, they found in favour of Arriva. They held that the Airport had abused their dominant position in the granting of coach concession rights.
The court held that there was no competitive justification for the right of first refusal that closed down potential markets, that Easybus had been treated differently and been given advantage to Arriva in being allowed the low capacity route alongside the concession to National Express and that a seven year exclusivity was not justifiable or used extensively in the coach route market.
The case should be viewed as a reminder that control of an exclusive asset, in this case the award of a coach concession, from an owner of infrastructure should be managed and awarded in a fair and non-discriminatory way. If a position of dominance is found, terms granting long exclusivity periods against market norms and allowing preferential treatment for companies without justification could lead to findings of infringement.
Although liability has been decided, damages are yet to be assessed. Other operators who participated in the process and felt similarly disadvantaged are advised to seek legal advice at this juncture to explore the possibility of being awarded damages for their own exclusion from this market.